Summer Holiday Lettings - Key considerations
2 May 2019
Although schools have just returned from the Easter break, it will not be long before School is out for summer. But the days of “No more Latin, no more French, no more sitting on the old school bench”, and empty playing fields are long gone.
To the 21st century school, the holidays represent an opportunity to hire out its premises to independent third-party enterprises for a range of educational uses including children’s sports and activity camps, language schools and conferences, for concerts, weddings and film locations. Done well, such arrangements can provide valuable income and enhance a school’s relationship with the local community and reputation generally.
When all goes smoothly, the school will be ready for the start of the autumn Term intact, both from a physical and reputational perspective. But what if things do not go smoothly?
For example, a school has an obligation to keep visitors to the premises safe. It needs to be confident that a third party will not expose the school to liability and adverse publicity.
That said, risk can be minimised by ensuring that the parties involved agree and document all arrangements fully in a legally binding contract.
The purpose of this article is to highlight some of the key elements of such an agreement; and some potential legal pitfalls to avoid.
Legal basis of occupancy
The intention of a school will be to grant a licence to a third-party, not a tenancy:
- A licence is a personal right, to use the premises for a specified purpose (often at specified times) and it does not grant possession to the third party.
- A tenancy (or 'lease') is an interest in land which grants the tenant rights such as the right to exclusive possession and “peaceful enjoyment” (i.e. the landlord promises not to interfere with the tenant’s right to the land).
This may seem to be stating the obvious. However, there is a long history of judicial consideration of instances in which, regardless of the intention of the parties, a lease has been deemed to be granted. The granting of a lease by a school to a commercial enterprise could be catastrophic, as a commercial lease attracts security of tenure under the Landlord and Tenant Act 1954, but such a claim can be avoided even if exclusive possession is granted provided the written agreement does not exceed 6 months. As most holiday lettings agreements will be for a week(s) or a month or so provided the agreement is in writing this danger can be avoided.
Time, manner, place
A properly drafted agreement will ensure that the rights of the third party are that of a licensee.
A licence agreement (whether it is called a “summer let agreement” or “hirer agreement” or other) should specify precisely: who is to be granted the licence; a description of the premises the user is permitted to use; how the premises are to be used; how the premises may be accessed; and the times of day the premises may be used and accessed.
The hirer should be given a contractual limited right to use specified facilities and premises at certain specified times. It is crucial for schools that when the licence ends, the hirer’s right to enter or use the premises also comes to an end.
During any hire period it is important that a school keep control over the third-party activities. A hire agreement should expressly set out that the school retains the right to inspect the third-party activities at any time and should have a widely expressed right to terminate its licence. A school will then be able to check compliance and limit damage caused by non-compliance.
Retaining control is particularly important to a school. School reputations are easily damaged; it is crucial that the agreement sets out the relationship between the school and the third-party enterprise in terms of branding, school name etc. A school may wish to distance itself from the activities of the licensee. Alternatively, a school might wish to agree to joint publicity if the activity is likely to benefit the reputation of the school.
Alterations and reinstatement
A hirer of school premises may wish to carry out temporary works. For example, a children’s activity camp might want to install a climbing wall; or a film company might wish to shield the 1950s art block from a medieval scene.
Ideally, in order to avoid disputes after the event, the exact requirements of the hirer should be agreed beforehand. The hirer should be required not to cause any damage, and to ensure that any alterations are removed, and the premises reinstated.
The effect of holiday enterprises on the local community should be considered and appropriate terms included in the licence. Does the school want to put a limit on the size or number of vehicles accessing the premises? If a holiday hiring is likely to increase traffic along quiet roads, a school may wish to add stipulations that the hirers encourage their clients to use a particular route. Night time use and noise also needs to be considered.
Health and Safety
A school as licensor of its premises has a duty to keep its occupiers safe, including all the attendees of summer camps, residential language courses, wedding guests etc. It is therefore crucial for the agreement to set out that a third-party hirer will accept responsibility for any accidents and will indemnify the school (where the third party is at fault). This will not exonerate a school from its statutory liabilities, but it may enable the school to recover losses from the hirer if the hirer was at fault.
Likewise, the hirer should be required to confirm that it has (and its employees have) all the necessary licences and qualifications to carry out the activities that they are carrying out.
Both the school and the hirer should be suitably insured. The school should require evidence that the hirer has adequate insurance and being adequately insured should be a term of the agreement.
School’s own covenants
A school should ensure that the proposed activities of a third party do not breach any restrictive covenants on its land, or any leasehold covenants. The hirer’s attention should be drawn to any such restriction or obligation and the hirer should be required to comply with the same.
While it is impossible to eliminate all risk, the following provisions in a holiday lettings agreement should allow others to enjoy the benefits of school facilities:
- Time, manner place – set out the parties, times, premises, access arrangements, etc. in the agreement;
- Termination – specify circumstances in which the school can terminate the agreement;
- Alterations and reinstatement – set out exactly what alterations are permitted and what reinstatement is required;
- Indemnity – ensure the third party hirer agrees to indemnify the school for any losses;
- Compliance - the hirer must show it is adequately insured and its employees suitably qualified and security checked; and
- Reputation – take steps to ensure the school retains control over its logos and branding.
Each holiday lettings licence agreement should be tailored to the parties and will depend on the nature of the activities that the hirer intends to undertake. We advise our schools clients to get these arrangements in place (i.e. documented, signed and returned) well in advance of the end of the Summer Term.